Project Accounting 230 Fall Online – For this project, assume that you started a corporation called Vanities Eyebrow

230 Course Project

For this project, assume that you started a corporation called Vanities Eyebrow Sculping Salon and Supply House in December 1, 2018. Your year-end is December

31st. During the month of December, the corporation set up a retail location where it provided eyebrow sculpting services and beauty supplies to its customers. You are the President and Treasurer of the Corporation and you are responsible for recording all the business transactions for the month and completing the entire accounting cycle for the year-ending December 31, 2018 (through the post-closing trial balance).

Part 1: Record the following external transactions for Vanities Eyebrow Sculping Salon and Supply for the month of December in the General Journal using the perpetual inventory system of accounting.

Transaction

Date

Description

1

12/1

Issued 100,000 shares of common stock for $100,000.

2

12/1

A retail space is rented. Paid for one year of rent in advance totaling

$24,000. (rent is $2,000 per month).

3

12/1

Purchased equipment for the business totaling $36,000 by signing a one-

year 6% note payable with payment and interest due on the maturity date

of the note.

4

12/5

Purchased $8,500 of supplies on account.

5

12/6

Purchased $20,000 of inventory on account with the term 2/15 net 30.

6

12/7

Provided services to customers for cash totaling $5,000.

7

12/8

Sold $4,000 of product on account terms 2/15 net 30. The inventory cost

$2,000.

8

12/8

Returned $500 worth of inventory that was purchased on account on 12/6.

9

12/9

Purchased an ad in the local newspaper to run during December for $400.

10

12/12

Customers purchased $1,000 of Holiday gift certificates for services to be

provided in the future (pre-paid for future services).

11

12/15

Paid employee salaries for the first half of December totaling $1,200.

12

12/15

Paid the invoice for the supplies that were purchased on December 5th.

13

12/18

Received half of the payment on the 12/8 sales invoice for the product

sold on that date.

14

12/20

Provided $4,500 of services to customers. $900 was paid for by redeemed

gift certificates and the remainder paid for by cash.

15

12/20

Customers returned $300 worth of product that was sold on account on

12/8. The returned inventory cost $150. The inventory was able to be

restocked.

16

12/21

Paid the invoice for the inventory purchased on account 12/6 minus

previous returns.

17

12/29

Paid a cash dividend of $800 to the shareholders.

General Journal Part 1

Record the external transactions in the General Journal

Ref #

Date

Account

Debit

Credit

1

2

3

4

5

6

General Journal Part 1 (Continued)

Ref #

Date

Account

Debit

Credit

Part 2: Post all the external transactions for the month of December from the General Journal to the General Ledger. The General Ledger T accounts are located at the end of the document templates and start on page 10.

Part 3: You can skip completing a Trial Balance (template not included) as you will prepare an adjusted trial balance after all the external and year-end adjusting entries have been made and posted to the General Ledger T accounts.

Part 4: Record the adjusting entries for Vanities Eyebrow Sculping Salon and Supply House for the month of December in the General Journal.

Transaction

Date

Description

A 1

12/31

Enter the adjusting entry for pre-paid rent for the month of December.

A 2

12/31

The equipment purchased for $36,000 has a useful life of 5 years and

no salvage value. (Monthly depreciation is $600).

A 3

12/31

At the end of December, $6,500 of supplies remain on hand.

A 4

12/31

The allowance method is followed in recording uncollectible

accounts. It is estimated that 10% of the remaining accounts

receivable at year-end will not be collected in the coming year.

A 5

12/31

Record the year-end adjusting entry for the 6% one-year notes

payable.

A 6

12/31

Salaries for the second half of December are $1,400, but they will not

be paid until January 3rd.

General Journal – Adjusting Entries Part 4

Ref #

Date

Account

Debit

Credit

A 1

A 2

A 3

A 4

A 5

A 6

Part 5: Post all the adjusting entries for the month of December from the General Journal to the General Ledger. General Ledger T accounts are located at the end of the project and start on page 10.

Part 6: Complete an Adjusted Trial Balance for the year ended December 31, 2018.

Note: I have included a few hash totals, so you can validate your numbers.

Vanities Eyebrow Salon and Supply House.

Adjusted Trial Balance

For the Year Ended December 31,2018

Account

Debit

Credit

Cash

$

$

Accounts Receivable

Less: Allowance for Doubtful Accounts

Pre-Paid Rent

Supplies

Inventory

Equipment

Accumulated Depreciation

Accounts Payable

Notes Payable

Deferred Revenue

Interest Payable

Salaries Payable

Common Stock

Retained Earnings

Dividends

Service Revenue

Sales Revenue

Sales Returns

Sales Discounts

Rent Expense

Supplies Expense

Cost of Goods Sold

Salary Expense

Advertising Expense

Depreciation Expense

Bad Debt Expense

Interest Expense

Total

$

151,950

$

Page 7

Part 7: Complete a Multi-Step Income Statement

for the year ended December 31, 2018.

Vanities Eyebrow Salon and Supply House.

Multi-Step Income Statement

For the Year Ended December 31, 2018

Revenue

Service Revenue

$

Sales Revenue

$

Less: Sales Return

Sales Discounts

Net Sales

$

Less: Cost of Goods Sold

Gross Profit

$

Expenses

$

Rent Expense

Supplies Expense

Salary Expense

Advertising Expense

Depreciation Expense

Bad Debt Expense

Total Operating Expenses

$

Operating Income

$

Other Revenue and Expenses

Interest Expense

Income Before Income Taxes

Income Tax Expense

0

Net Income

$

Part 8 Complete a Statement of Retained Earnings

for the year ended December 31, 2018.

Vanities Eyebrow Salon and Supply House

Statement of Retained Earnings

For the Year Ended December 31, 2018

Beginning Balance, December 1, 2018

$

0

Net Income

Less: Dividends

Ending Balance, December 31, 2018

$

Page 8

Part 9: Prepare a Balance Sheet as of December 31, 2018.

Vanities Eyebrow Salon and Supply House

Balance Sheet

December 31, 2018

Assets

Liabilities

$

$

$

Total Current Liabilities

$

Property Plant and Equipment

Total Liabilities

$

Stockholders’ Equity

Total Long-Term Assets

$

Total Stockholders’ Equity

Total Liabilities and

Total Assets

$

$

140,240

Stockholders’ Equity

Part 10: Record the closing entries for the year-ended December 31, 2018.in the General Journal.

Part 11: Post closing Entries from the General Journal to General Ledger

Ref #

Date

Account

Debit

Credit

12/31

C. 1

Retained Earnings

12/31

Retained Earnings

C. 2

3

12/31 Retained Earnings

Page 9

Part 12: Prepare a Post-Closing Trial Balance. Fill in account names.

Vanities Eyebrow Salon and Supply House

Post-Closing Trial Balance

For the Year Ended December 31, 2018

Account

Debit

Credit

Total

$ 141,010

General Ledger Parts 2 & 5

References are posted in the accounts to help you navigate the project.

Posted journal references are in left column for debit entries and right column for credit entries for each account. ATB (Adjusted Trial Balance) is ending balance for each account prior to closing entries and the closing balance for all balance sheet accounts. After closing entries are posted the CB (Closing Balance) should be zero for all revenue and expense accounts. See the illustrative sample account at the end of the project with posting references.

Assets

Ref #

Cash

Ref #

1

2

6

9

10

11

13

12

14

16

17

ATB

Ref #

Accounts Receivables

Ref #

7

13

15

ATB

Ref #

Inventory

Ref #

5

7

15

8

16

ATB

Ref #

Equipment

Ref #

3

ATB

Accumulated

Ref #

Depreciation

Ref #

A 2

ATB

Liabilities

Allowance for Uncollectible

Ref #

Accounts

Ref #

A 4

ATB

Ref #

Pre-Paid Rent

Ref #

2

A 1

ATB

Ref #

Supplies

Ref #

4

A 3

ATB

Ref #

Accounts Payable

Ref #

8

4

12

5

16

0

ATB

Ref #

Notes Payable

Ref #

3

ATB

Ref #

Deferred Revenue

Ref #

14

10

ATB

Page 10

Liabilities Continued…

Ref #

Interest Payable

Ref #

A 5

ATB

Ref #

Salaries Payable

Ref #

A 6

ATB

Revenues

Ref #

Service Revenue

Ref #

6

14

C 1

ATB

0

CB

Ref #

Sales Revenue

Ref #

7

C 2

ATB

CB

Ref #

Sales Returns

Ref #

15

ATB

C 1

CB

Ref #

Sales Discounts

Ref #

13

ATB

C 1

CB

Expenses

Ref #

Rent Expense

Ref #

A 1

ATB

C 2

CB

Ref #

Supplies Expense

Ref #

A 3

ATB

C 2

CB

Ref #

Cost of Goods Sold

Ref #

7

15

ATB

C 2

CB

Ref #

Salary Expense

Ref #

11

A 6

ATB

C 2

CB

Ref #

Advertising Expense

Ref #

9

ATB

C 2

CB

Page 12

Expenses Continued…

Ref #

Depreciation Expense

Ref #

A 2

ATB

C 2

CB

Ref #

Bad Debt Expense

Ref #

A 4

ATB

C 2

CB

Ref #

Interest Expense

Ref #

A 5

ATB

C 2

CB

Stockholders’ Equity

Ref #

Common Stock

Ref #

1

ATB

Ref #

Dividends

Ref #

17

ATB

C 3

CB

Page 13

Ref #

Retained Earnings

Ref #

0

ATB

C 1

C 2

CB

C 3

Illustrative posting to T accounts

Ref #

Cost of Goods Sold

Ref #

18

2,000

100

21

A 7

1,000

ATB

2,900

2,900

C 2

CB

0

External journal reference = #

Adjusting journal reference = A #

Closing journal reference = C #

ATB =Adjusted Trial Balance

account ending $ balance

CB= Closing Trial Balance account

ending $ balance

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